EUR 44.11 For Business Accounts Only

Vermilion Int'l Compass: Global Equity Strategy

Broad-Based Improvement in India -- Add Exposure

Our 2023 outlook remains unchanged as we continue to expect broad-based consolidation with $93 capping upside on MSCI ACWI (ACWI-US), while important downside targets are $86, $84, and $75-77. We also continue to advocate a tactical overweight to defensives including gold miners and MSCI ACWI Consumer Staples, Health Care, and Utilities, given ACWI-US remains near the top of our expected 2023 trading range. With that said, we have been recommending defensives ad nauseam for over three months, and we are now starting to see broad-based improvement, particularly in Japan and India, but also in Taiwan and South Korea. The majority of today's buy recommendations are cyclicals in these countries.

Upgrading India to Overweight; Remain Overweight Europe, Japan, and MSCI EAFE. Non-U.S. equities continue to outperform, with RS uptrends intact on the STOXX Europe 50, Japan's TOPIX and TOPIX Small, and on the MSCI EAFE (EFA-US). Remain overweight these areas. We are also upgrading India to overweight; price on the S&P BSE SENSEX is reversing topside its 6-month downtrend, and RS is also reversing higher at 2-year uptrend support -- add exposure... see charts below.
Thoughts on Europe and Japan. The EURO STOXX 50 remains below 4400-4415 resistance outlined in our 4/27/23 Int'l Compass, but we expect pullbacks to the 4000-4100 area to be buying opportunities. We continue to recommend an overweight to Japan, but both the TOPIX and TOPIX Small indexes are near resistance within their intact 1-year uptrend channels. A pullback to the 1950-2000 range on the TOPIX would provide a better entry point... see chart below.
Actionable Theme: Cyclicals. Cyclical stocks are bullishly inflecting in Japan, India, South Korea, and Taiwan -- add selective exposure. Sectors covered include Consumer Discretionary, Energy, Financials, Industrials, Technology, and Communications... see pages 2-13.
Actionable Theme: Defensives. We simply cannot go a single report without harping on defensives. We highlight our favorite names to buy/stay long within Services, Consumer Staples, Health Care, and Utilities...